Woooosh! What a panic washout move that was!

Wow! Look at this chart go parabolic!

These are two of the types moves that I was able to master at trading over the last few years, and let me tell you it took a LONG time to figure just these two plays. They were the bread and butter of my trading, the A++ setups. I cannot recall when it was, or who it was, but I recall a teacher of mine telling me a story about a college football head coach that was extremely successful during his entire career. The person asked the coach, “How did you always have a winning team that would dominate the opposition?” The coach in all his wisdom did not give the man any specific reasoning or wisdom, but what he did give him opened his mind. The coach, on a simple napkin wrote simply and plainly, “ADAPT OR PERISH.”

This simple story and anecdote has stuck with me over the years and with the following blog post I want to explain why that simple idea is SO very important to anyone that is in the trading game.

Human nature has rarely, if ever, changed during the course of history. We have just a few emotions that can trigger us to do irrational things: FEAR, GREED, HOPE, ANGER. These are, to me, the most powerful of the major 7 that pertain to what we do on a daily basis. So many trades we actually take can stem right from these 4 emotions. Just think about it, how many times have you taken a trade with ZERO emotions involved? I bet is far less than you think, and if not, your probably a robot anyways.

A robot, hmmm, that’s interesting because in the last few months and years that is EXACTLY what you are likely to be trading against in the markets: a highly skilled robot trading algorithm. This program has likely taken in much more information than you have via its programming. In fact, it’s likely consumed more information than you ever could in several lifetimes of trading. This should stoke some thought into how you currently trade (likely you are aware of this anyway).

As a trader, when things are going great and you are on a consistent streak, you rarely think about these things. You carry on from day to day with business as usual. This is actually the perfect time to be introspective. Think about the success you are having and how you are attaining it. Most of us, including myself, tend to only look at our trading when we are not trading very well. We take a step back, review our trades and look to see what we are doing wrong (vs. what we are doing right when we are winning). This is backwards thinking.

Stay with me here…

If you are only reviewing your trades when you are on a bad run, your mindset is generally not where it should be to review what you have been doing. Yes, it might still help but its not going to be the best for your long-term success in this business. Getting in the habit of reviewing what works and what doesn’t work is vital to how long you will last as a trader. Take into account the trades that have the highest odds of success and only focus on them. Drown out everything else that doesn’t work and trade your edge.

What if that edge goes away though? What if my A+ setups don’t happen anymore? What now?

This is a question that has lingered in my head for the last few months and keeps reminding me to, ADAPT or PERISH.